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Fashion Industry Rallies to Aid Designer in Trouble by Cathy Horyn
Few dresses have glamorized bare flesh more than the silk slip that Carolyn Bessette wore to marry John F. Kennedy Jr. in 1996. It blotted from the mind the schoolgirl roundness of Diana, it stoked the copy kings and it gave an unknown designer, Narciso Rodriguez, a very nice push.
But in recent months, behind the media blaze of his shows and his image as a successful designer, Mr. Rodriguez has been struggling. He trusted the wrong people, he said, listing lawyers and other advisers, and this trust put his business in a yoke. He could continue to plod along and hope for the best, or he could declare bankruptcy and call it a day.
Instead, against the view of the fashion world as a cold-hearted place, he picked up the phone and asked for help. He called Donna Karan, Ralph Lauren, Anna Wintour, the editor in chief of Vogue, and his close friends in the parallel world of celebrity, Jerry and Jessica Seinfeld. And he told them all the same thing.
“He said, ‘You’re not going to believe this, but I have no money,’ ” Ms. Karan recalled.
Today, Mr. Rodriguez’s candor is being unexpectedly rewarded. Liz Claiborne, the giant American clothing manufacturer, is acquiring his upscale label.
The $12 million purchase price is small — that of any number of apartments in New York. But the transaction is the first in the American fashion industry in which a mainstream clothing company is betting that it can buy a niche luxury designer, with both coming out ahead.
How the deal got accomplished is a story about an industry that operates well outside the norms of 21st century capitalism. The fashion industry is a gigantic $300 billion business made up of public companies as well as independent fashion houses. But it also functions as a neighborhood, where relationships and time-tested handshakes go a long way in determining how things get done.
The news of the purchase comes a week after Claiborne reported a 65 percent drop in first-quarter earnings, sending its stock tumbling 17 percent. The magnitude of the decline suggests that Claiborne, like other companies whose main business is in department stores, has been too slow to grasp that many consumers today prefer to shop in trendy stores like H & M.
And the deal comes after six months of negotiations dotted with the deep mistrust that defines the traditional divide between manufacturers and designers.
Mr. Rodriguez is widely regarded as one of the leading designers of his generation, a minimalist with heat. Naturally, he harbored fears about being eaten up by a big manufacturer. More than once in February and March, when it was not at all clear there would be a deal, he said, in his mildly cynical tone, “This is not my dream, to sell my company to Liz Claiborne.”
As it turned out, Claiborne’s board had doubts about him as well. It wanted to know why he had not been more successful. While it generally takes at least 10 years to get a designer business going, by that standard, Mr. Rodriguez, 46, was way behind peers like Marc Jacobs and Michael Kors. He had no accessories, no shops of his own. And critics were starting to complain that his designs had become repetitive.
Claiborne might not be spending that much to buy his company, but if it planned to spend many millions more to develop it, shareholders needed to know what, beyond a stellar name, they were buying.
The son of Cuban immigrants, Mr. Rodriguez got his start on Seventh Avenue in the 1980s as Ms. Karan’s assistant at Anne Klein. He then went to Calvin Klein, where he met Ms. Bessette, whose job was to look after V.I.P. clients. They grew close. It was at Cerutti, in Paris, where he went to work in the mid-’90s, that he made her wedding dress in secret.
Along the way, Mr. Rodriguez honed his style of clean, seductive sportswear, its lines announcing his Cuban roots. Like his clothes, he presents an implacable air of calm. “He’s so low-key sometimes,” Ms. Wintour said. “And he’s not a diva.”
In 1997, Mr. Rodriguez started his own business in Milan, later moving it to New York. By 2003, when the American industry named him designer of the year for the second successive year, his clothes were selling in stores like Bergdorf Goodman and Neiman Marcus, and they were generating annual sales of nearly $14 million.
To help finance his business, Mr. Rodriguez turned to Massimo Ferretti, an Italian manufacturer whose company owns Moschino and Alberta Ferretti.
Mr. Rodriguez had any number of offers, he said, but he liked Mr. Ferretti and he thought they could work well together. They formed a partnership in which Mr. Ferretti would produce and distribute Mr. Rodriguez’s clothes, paying him royalties.
Although the arrangement worked for a while, the problems were soon evident to both men. Under the terms of their agreement, Mr. Rodriguez could not use other companies to make accessories, yet Mr. Ferretti showed little interest in making them. (In an interview, Mr. Ferretti said accessories accounted for “maybe 3 or 4 percent” of Mr. Rodriguez’s revenues.)
Few dresses have glamorized bare flesh more than the silk slip that Carolyn Bessette wore to marry John F. Kennedy Jr. in 1996. It blotted from the mind the schoolgirl roundness of Diana, it stoked the copy kings and it gave an unknown designer, Narciso Rodriguez, a very nice push.
But in recent months, behind the media blaze of his shows and his image as a successful designer, Mr. Rodriguez has been struggling. He trusted the wrong people, he said, listing lawyers and other advisers, and this trust put his business in a yoke. He could continue to plod along and hope for the best, or he could declare bankruptcy and call it a day.
Instead, against the view of the fashion world as a cold-hearted place, he picked up the phone and asked for help. He called Donna Karan, Ralph Lauren, Anna Wintour, the editor in chief of Vogue, and his close friends in the parallel world of celebrity, Jerry and Jessica Seinfeld. And he told them all the same thing.
“He said, ‘You’re not going to believe this, but I have no money,’ ” Ms. Karan recalled.
Today, Mr. Rodriguez’s candor is being unexpectedly rewarded. Liz Claiborne, the giant American clothing manufacturer, is acquiring his upscale label.
The $12 million purchase price is small — that of any number of apartments in New York. But the transaction is the first in the American fashion industry in which a mainstream clothing company is betting that it can buy a niche luxury designer, with both coming out ahead.
How the deal got accomplished is a story about an industry that operates well outside the norms of 21st century capitalism. The fashion industry is a gigantic $300 billion business made up of public companies as well as independent fashion houses. But it also functions as a neighborhood, where relationships and time-tested handshakes go a long way in determining how things get done.
The news of the purchase comes a week after Claiborne reported a 65 percent drop in first-quarter earnings, sending its stock tumbling 17 percent. The magnitude of the decline suggests that Claiborne, like other companies whose main business is in department stores, has been too slow to grasp that many consumers today prefer to shop in trendy stores like H & M.
And the deal comes after six months of negotiations dotted with the deep mistrust that defines the traditional divide between manufacturers and designers.
Mr. Rodriguez is widely regarded as one of the leading designers of his generation, a minimalist with heat. Naturally, he harbored fears about being eaten up by a big manufacturer. More than once in February and March, when it was not at all clear there would be a deal, he said, in his mildly cynical tone, “This is not my dream, to sell my company to Liz Claiborne.”
As it turned out, Claiborne’s board had doubts about him as well. It wanted to know why he had not been more successful. While it generally takes at least 10 years to get a designer business going, by that standard, Mr. Rodriguez, 46, was way behind peers like Marc Jacobs and Michael Kors. He had no accessories, no shops of his own. And critics were starting to complain that his designs had become repetitive.
Claiborne might not be spending that much to buy his company, but if it planned to spend many millions more to develop it, shareholders needed to know what, beyond a stellar name, they were buying.
The son of Cuban immigrants, Mr. Rodriguez got his start on Seventh Avenue in the 1980s as Ms. Karan’s assistant at Anne Klein. He then went to Calvin Klein, where he met Ms. Bessette, whose job was to look after V.I.P. clients. They grew close. It was at Cerutti, in Paris, where he went to work in the mid-’90s, that he made her wedding dress in secret.
Along the way, Mr. Rodriguez honed his style of clean, seductive sportswear, its lines announcing his Cuban roots. Like his clothes, he presents an implacable air of calm. “He’s so low-key sometimes,” Ms. Wintour said. “And he’s not a diva.”
In 1997, Mr. Rodriguez started his own business in Milan, later moving it to New York. By 2003, when the American industry named him designer of the year for the second successive year, his clothes were selling in stores like Bergdorf Goodman and Neiman Marcus, and they were generating annual sales of nearly $14 million.
To help finance his business, Mr. Rodriguez turned to Massimo Ferretti, an Italian manufacturer whose company owns Moschino and Alberta Ferretti.
Mr. Rodriguez had any number of offers, he said, but he liked Mr. Ferretti and he thought they could work well together. They formed a partnership in which Mr. Ferretti would produce and distribute Mr. Rodriguez’s clothes, paying him royalties.
Although the arrangement worked for a while, the problems were soon evident to both men. Under the terms of their agreement, Mr. Rodriguez could not use other companies to make accessories, yet Mr. Ferretti showed little interest in making them. (In an interview, Mr. Ferretti said accessories accounted for “maybe 3 or 4 percent” of Mr. Rodriguez’s revenues.)
